TESCO - One of the largest sale & leaseback transactions in Central and Eastern Europe for Tesco

The Challenge

Cushman & Wakefield was instructed on behalf of Tesco to dispose of freehold interests in a circa €175m portfolio of five distribution centres totalling 270,000 sq m located across four CEE countries: Czech Republic, Slovakia, Hungary and Poland. The properties were to be leased back to Tesco on a long term basis whilst incorporating operational flexibility.

The Solution

In our capacity as an exclusive selling agent, we:

1. Provided strategic advice as to how to best structure the sale 2. Helped and coordinated with collecting inputs for due diligence on each property and each local market. 3. Worked alongside Tesco and their legal advisors to structure the lease terms and conditions and draft purchase agreements. 4. Set-up and administered an electronic dataroom for each separate transaction within the portfolio.

We advised our client to separate the portfolio into four separate transactions. Properties in Czech Republic, Slovakia, and Poland were offered individually to maximise the potential price achieved and the two assets in Hungary were merged into a newly created SPV in order to minimise exposure to excessive transfer costs.

C&W created a detailed Investment Memorandum for the portfolio and presented the opportunity directly as a sale-and-leaseback portfolio to specifically identified investors. A preferred party was selected, granted exclusivity, and due diligence for the purchase commenced.

The Results

The Czech and Polish assets were successfully sold to DEKA Immobilien of Germany.

C&W successfully concluded the sale of the two Hungarian properties to W.P. Carey of the USA.

We successfully negotiated multi-jurisdiction Purchase Agreements and Lease documentation with the purchasers. The due diligence process was managed effectively on the whole portfolio and reputable buyers were identified with the deals closing in a highly challenging market climate. We enabled Tesco to receive sale receipts within the desired timeframe and achieved an excellent pricing level given prevalent market conditions.